Iran Sanctions Waivers: The Devil Is In The Details

The U.S. Administration’s decision to grant waivers on its Iran sanctions has placated fears that legal Iranian volumes will completely disappear from global markets. For many weeks and months, it seemed that the Trump Administration would relentlessly push the sanctions through; however, in the end it prioritized midterm elections and a more gradual implementation of sanctions, (temporarily) marginalizing National Security Advisor John Bolton. In October, Iran exported or placed into floating storage 1.7-1.8 mbpd of crude, a number that left it roughly flat month-on-month and everyone expected the November export debacle. However, under the U.S. sanctions, the eight “constituencies” that were granted Significant Reduction Exemption (SRE) have the possibility to import up to 1.5 mbpd, making the sanctions whammy largely rhetoric. Yet the devil, as usual, is hidden in the details.

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China and India were the largest markets for Iranian crude before the onset of sanctions and will remain such for the upcoming six months. More than 29 percent of all Iranian crude exports this year went to China and after November 4, Beijing’s share will increase to around 33 percent. India will remain the second-largest importer, taking up around one-fifth of the total, followed by South Korea which has had difficulties replacing South Pars condensate with other grades, forcing it to revert to Iranian volumes despite a weak naphtha market…

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